There are three agri plcs, in alphabetical order, FBD, Glanbia and Kerry.
All three have gone on the stock market with a core business that has attracted outside capital and has a record of paying significant dividends to shareholders, both new investors and original farmer founders.
All three have also associated companies with widely different activities but all three associated companies have large and valuable stakes in the quoted plc.
FBD Holdings, the quoted company, has 24% of its shares held by a quasi co-op which has a highly successful hotel business in Ireland and Spain, together with some smaller investments.
The undisguised object of such a large shareholding is to maintain a strong stake on behalf of farmers in the only Irish-owned insurance company and to ensure that Irish farmers can obtain critically important insurance at a reasonable cost.
Glanbia has a completely different origin as the amalgamation of two old processing co-ops, Waterford and Avonmore.
Both had a proportion of their shares quoted on the stock market. The foundation of an American business preceded the 1997 amalgamation but since then the quoted company has concentrated on high-value-added, mainly health related, dairy nutritional products while the co-op handled Irish farmers’ output of milk and grain as well as supplying inputs.
Again, as in the case of FBD, up to the present time the co-op Tirlán has retained the largest block of shares in the plc amounting to 29%.
Last week, I attended an information meeting as a prelude to co-op shareholders being asked to vote to reduce their share in the plc.
They will gain financially as individuals from such a move but more to the point, it will release cash, several hundred million to allow investment in whatever management decide to invest in.
It will also reduce the potential danger of having a huge proportion of the co-op’s total value in one quoted stock. What is proposed seems to make sense and I imagine it will be voted through. The key measure of success will be what use Tirlán makes of the cash gained from the sale of the Glanbia shares.
The least satisfactory development of the plc co-op relationship has been in Kerry — ironically an overall incredibly successful Irish company that has achieved truly international scale and credibility and made many of its original farmer shareholders millionaires.
With only 10% of the plc now owned by the co-op, a stake still worth more than €1.5 billion, its future is still unclear.
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